November 26, 2024
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Are Buyers or Vendors the Bigger Source of Software Purchase Regret?
A global survey of over 3,500 businesses from Capterra found that 48% regret at least one software purchase made in the last 18 months.
Of the regretful software buyers, 63% described the financial impact of the investment as “significant to monumental.” The top impacts of purchase regret for businesses include higher costs cited by 49%, security vulnerability and reduced productivity at 42% each, adoption challenges cited by 39%, and competitive disadvantage at 34%.
The survey still found that 73% of organizations plan to increase their software spending in 2025, with a significant focus on IT systems and AI.
Key factors contributing to (or mitigating) purchase regret include:
- An oversaturated AI market: With the rapid growth of AI-supported software options, the number of buyers struggling to evaluate the value and risks of GenAI tools has jumped 70% year-over-year.
- Unclear goals: Buyers who regret their purchases cite the need for better goal-setting (36%) and stronger stakeholder alignment (32%) before making decisions.
- Decision paralysis: Most successful buyers (57%) take three months or less to evaluate their software options, while most regretful buyers (54%) take five months or longer.
- Prior software experience and user reviews: Successful buyers are 50% more likely to include prior software experience in their initial evaluations and place significant weight on vendor reputation. Regretful buyers, however, tend to focus more on ads and social media.
- Product trials: Free product trial periods (going beyond demos) offer companies an optimal opportunity to test functionality and ease of use before purchase. Successful buyers are 25% more likely to factor product trials in their final purchase decision versus regretful buyers.
Gartner’s “Why Software Buyers Experience Regret” report last year similarly found that three in five buyers regretted a software purchase within the previous 18 months. However, Gartner’s study found software vendors equally at fault for not managing expectations.
Capterra’s study found that 88% of regretful software buyers say they are likely to purchase software based solely on information they get directly from vendors.
Warning signs in the sales pitch process that may indicate potential regret from buyers, according to Gartner, include overconfidence in the product, inexperience in the business, a failure to use product comparison sites, or businesses that are clearly in an accelerated growth stage.
Thibaut de Lataillade, global VP of products at Gartner Digital Markets, told TechRepublic, “The primary concern here is the unexpected cost or total cost of ownership, which customers often do not fully understand due to lack of transparency in costing of some of these software products. Customers often do not know about the additional costs that may come from product implementations, configurations, integrations and training needed to use the software.”
The top vendor-related factors driving regret include problematic handoff between sales and implementation (43%) and mismanaged expectations (42%). Lataillade added, “Both factors can quickly sour the post-purchase experience, leading to dissatisfaction. The implications of such dissatisfaction are not confined to a mere transaction but extend to the heart of strategic business decisions.”
BrainTrust
Bob Amster
Principal, Retail Technology Group
Jamie Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Neil Saunders
Managing Director, GlobalData
Recent Discussions
Discussion Questions
Are software buyers or selling vendors more at fault for the high rates of regret around software purchases?
What advice would you have for both buyers and sellers to avoid a post-purchase letdown?
Poll
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Let’s take the approach of discussing the shared responsibility between vendors and sellers to do all that is possible to make the right decisions and avoid regret on both sides.
The vendor needs to take absolute responsibility for guiding the potential buyer in looking at and choosing the right solutions. The buyer needs to take accountability for preparation, asking the right questions, and seeking a consultant to sit in and guide them properly. Very few buyers are true experts on their own, nor know all the right questions to ask.
Buyers need to spend more time focusing on the problems they are trying to resolve than they do in choosing the software itself. When it’s a struggle to choose between many solutions, buyers need to revisit the original problems, and at some point revisit each of the sellers with your specific concerns.
It’s likely the buyer is responding directly to the seller’s advertisement. The buyer is lured in by features. Buyers are often attracted to the bells and whistles they do not currently have. Buyers tend to overlook their actual needs in a comprehensive way. Buyers and sellers should follow a clear agenda in their sessions to be sure the essentials don’t get overlooked.
Most buyers want an all-in-one software suite that meets all of their criteria. One solution, one contract, and one interface to master. But that’s not always the best solution because any given system might excel at one thing, and not the other.
Application programming interfaces (APIs) have advanced significantly, making it easier to connect two systems than it once was. Nevertheless, it’s wise for vendor and buyer to explore integration issues with current systems. Sometimes, vendors under consideration can offer price collaboration with a separate vendor. Most buyers don’t know that is even possible but it is.
It goes without saying that the vendor needs to do comprehensive diligence on the potential buyer to be sure the right solutions are being offered. Buyers need to seek reviews from similar users.
Vendors should offer, and buyers should request, second demonstrations. Common sense, right? You would be surprised how little that actually happens.
This situation is unusual, though. As a former computer seller there’s a joke that applies… what’s the difference between a software salesman and a used car salesman? The car salesman knows when they’re lying…
Buying software is complex, not least because it usually has to serve multiple masters (stakeholders) and it needs to work with legacy systems and processes. Due diligence is essential. as is a clear plan for implementation. That responsibility primarily lies with the buyer, with help from the vendor. Companies also need to stop chasing every shiny new tech solution and look for software with proven results.
I spend most of my energy helping vendors communicate strategically about their retail solutions, and the experiences their sales professionals share with me make me wonder about some of the survey results reported here.
For starters, my clients report typical sales cycles as long as 12-18 months for retail systems. Many times that includes an RFP process, interviews with existing non-competitive users, and other due diligence.
Retailers know better than to buy a bundle of software off the shelf and fend for themselves. It is expected that vendors will provide implementation and integration help, user training, periodic updates, and after-sale tech support. Due diligence prior to the sale is usually intensive, and decisionmakers across IT, operations, finance, and corporate strategy must agree before the check is signed.
Key questions any vendor must be prepared to address include: How sound are your corporate finances (i.e. will you be there for us in the years ahead)? Will you introduce us to some of your customers (if they are willing to meet us, they are probably satisfied)? Share the details behind some of your user success stories (prove to us that you understand retailers’ business priorities)? Show us some hard ROI projections. Will implementing your solution require our people to change the way they work?
Notice I haven’t mentioned your “technical superiority” yet. Most retailers won’t be easy to impress with some BS about AI. Even the CIO is looking at the larger picture. Ultimately, they tend to select the best partner, not the company with the coolest code or the slickest interface.
The expression “caveat emptor” is “as old as the hills”, and for good reason. Software vendros are predominantly prone to ‘push’ their solution, even though it doesn’t quite do all the things they claim it does or it doesn’t do them all well.
It is up to the purchaser to conduct the due diligence to determine if the solution fits, or will eventually fit the business. We have been assisting purchasers of software to make well-informed decisions for decades. Many software developers, aware of the repercussions of selling “smoke and mirrors”, are very up front about the current limitations of their product, and provide a roadmap for the enhancement of their product.
From “walk on water” to “snake oil” – it’s okay, AI, it happens to the best of them. Good news, oil floats – you’ll be fine!
I’ve been engaged in biztech solution design/architecture/implementation for nearly 20 years and have found that when things go sideways culpability is sometimes the vendor, sometimes the buyer and sometimes both. Those cases often remind me of what one of my mentor’s said to me long ago when I discussed one of my earliest experiences in solution design and implementation: how did you contribute to the problem?
Ironically, the underlying problems are well known, documented and studied and they still happen. And they happen with everything from small to large, enterprise level solutions that cost millions to purchase, millions to implement, millions in change management and millions in excess (over budget, over time, over resource). In fact, I once read a statistic that suggested that over 1/3 of tech purchases in the US are unused or under utilized resulting in billions of budgetary waste.
The answers are relatively simple but so is getting along in Congress. In other words, it’s much more about managing the multitude of personalities and personal interests that are a natural part of these projects and often, it’s also about strength in leadership.
Ultimately, it’s the buyer who owns this. Fast talking, ‘promise the world’ sales techniques are nothing new. What is different, however, are in how many recurring services today come with dubious termination provisions that make it very difficult for buyers to extricate themselves from these service providers. As I personally discovered when I tried to terminate the services for a marketing platform, only to learn that I couldn’t terminate the agreement for 10 more months and had to pay thousands more for a platform that we were not using. Here’s my advice to buyers: pay particular attention to the termination clause. Push to have the most flexible termination clause you can get. Long term contracts that include auto-renewal may not be in your best interest.
To avoid a post-purchase letdown, software buyers can ask more questions about system requirements, how their current processes will change, realistic timelines, and add-on expenses like customization, training and updates for flexibility as needs change.
Software sellers can listen to and address buyers’ concerns with a genuine focus on serving rather than just selling. Sellers can maximize lifetime client value by shifting from a short-term transactional mindset to a long-term partnership mindset. Sharing case studies, testimonials and stats on process improvements can build credibility and trust.
As a former computer seller there’s a joke that applies… what’s the difference between a software salesman and a used car salesman? The car salesman knows when they’re lying… It’s a buyer beware situation but most buyers fail to understand how easy it is for those selling software to lie — often without knowing it. This is enabled by software being infinitely modifiable – in theory. In practice, it’s not. Buyers need to be extra wary when approached by software vendors.
As a seller of software for decades, the responsibility for success is shared. The seller needs to focus on the prospects specific goals. Then share those goals with the supporting team. I’ve sold identical solutions to multiple clients. Each had a different objective and use case. If the support team isn’t aware, the support will fail.
On they buyer side, many buyers go cheap on training and support. Key elements to initial and ongoing success. Buyers also sometimes hide their true intentions. Lack of disclosure doesn’t help the selling team optimally align the solution.
While it’s challenging to be fully collaborative in any negotiation, selecting a proven and trustworthy vendor to get the capabilities fit right, and committing to invest in success results in the best outcome for all parties.
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Let’s take the approach of discussing the shared responsibility between vendors and sellers to do all that is possible to make the right decisions and avoid regret on both sides.
The vendor needs to take absolute responsibility for guiding the potential buyer in looking at and choosing the right solutions. The buyer needs to take accountability for preparation, asking the right questions, and seeking a consultant to sit in and guide them properly. Very few buyers are true experts on their own, nor know all the right questions to ask.
Buyers need to spend more time focusing on the problems they are trying to resolve than they do in choosing the software itself. When it’s a struggle to choose between many solutions, buyers need to revisit the original problems, and at some point revisit each of the sellers with your specific concerns.
It’s likely the buyer is responding directly to the seller’s advertisement. The buyer is lured in by features. Buyers are often attracted to the bells and whistles they do not currently have. Buyers tend to overlook their actual needs in a comprehensive way. Buyers and sellers should follow a clear agenda in their sessions to be sure the essentials don’t get overlooked.
Most buyers want an all-in-one software suite that meets all of their criteria. One solution, one contract, and one interface to master. But that’s not always the best solution because any given system might excel at one thing, and not the other.
Application programming interfaces (APIs) have advanced significantly, making it easier to connect two systems than it once was. Nevertheless, it’s wise for vendor and buyer to explore integration issues with current systems. Sometimes, vendors under consideration can offer price collaboration with a separate vendor. Most buyers don’t know that is even possible but it is.
It goes without saying that the vendor needs to do comprehensive diligence on the potential buyer to be sure the right solutions are being offered. Buyers need to seek reviews from similar users.
Vendors should offer, and buyers should request, second demonstrations. Common sense, right? You would be surprised how little that actually happens.
This situation is unusual, though. As a former computer seller there’s a joke that applies… what’s the difference between a software salesman and a used car salesman? The car salesman knows when they’re lying…
Buying software is complex, not least because it usually has to serve multiple masters (stakeholders) and it needs to work with legacy systems and processes. Due diligence is essential. as is a clear plan for implementation. That responsibility primarily lies with the buyer, with help from the vendor. Companies also need to stop chasing every shiny new tech solution and look for software with proven results.
I spend most of my energy helping vendors communicate strategically about their retail solutions, and the experiences their sales professionals share with me make me wonder about some of the survey results reported here.
For starters, my clients report typical sales cycles as long as 12-18 months for retail systems. Many times that includes an RFP process, interviews with existing non-competitive users, and other due diligence.
Retailers know better than to buy a bundle of software off the shelf and fend for themselves. It is expected that vendors will provide implementation and integration help, user training, periodic updates, and after-sale tech support. Due diligence prior to the sale is usually intensive, and decisionmakers across IT, operations, finance, and corporate strategy must agree before the check is signed.
Key questions any vendor must be prepared to address include: How sound are your corporate finances (i.e. will you be there for us in the years ahead)? Will you introduce us to some of your customers (if they are willing to meet us, they are probably satisfied)? Share the details behind some of your user success stories (prove to us that you understand retailers’ business priorities)? Show us some hard ROI projections. Will implementing your solution require our people to change the way they work?
Notice I haven’t mentioned your “technical superiority” yet. Most retailers won’t be easy to impress with some BS about AI. Even the CIO is looking at the larger picture. Ultimately, they tend to select the best partner, not the company with the coolest code or the slickest interface.
The expression “caveat emptor” is “as old as the hills”, and for good reason. Software vendros are predominantly prone to ‘push’ their solution, even though it doesn’t quite do all the things they claim it does or it doesn’t do them all well.
It is up to the purchaser to conduct the due diligence to determine if the solution fits, or will eventually fit the business. We have been assisting purchasers of software to make well-informed decisions for decades. Many software developers, aware of the repercussions of selling “smoke and mirrors”, are very up front about the current limitations of their product, and provide a roadmap for the enhancement of their product.
From “walk on water” to “snake oil” – it’s okay, AI, it happens to the best of them. Good news, oil floats – you’ll be fine!
I’ve been engaged in biztech solution design/architecture/implementation for nearly 20 years and have found that when things go sideways culpability is sometimes the vendor, sometimes the buyer and sometimes both. Those cases often remind me of what one of my mentor’s said to me long ago when I discussed one of my earliest experiences in solution design and implementation: how did you contribute to the problem?
Ironically, the underlying problems are well known, documented and studied and they still happen. And they happen with everything from small to large, enterprise level solutions that cost millions to purchase, millions to implement, millions in change management and millions in excess (over budget, over time, over resource). In fact, I once read a statistic that suggested that over 1/3 of tech purchases in the US are unused or under utilized resulting in billions of budgetary waste.
The answers are relatively simple but so is getting along in Congress. In other words, it’s much more about managing the multitude of personalities and personal interests that are a natural part of these projects and often, it’s also about strength in leadership.
Ultimately, it’s the buyer who owns this. Fast talking, ‘promise the world’ sales techniques are nothing new. What is different, however, are in how many recurring services today come with dubious termination provisions that make it very difficult for buyers to extricate themselves from these service providers. As I personally discovered when I tried to terminate the services for a marketing platform, only to learn that I couldn’t terminate the agreement for 10 more months and had to pay thousands more for a platform that we were not using. Here’s my advice to buyers: pay particular attention to the termination clause. Push to have the most flexible termination clause you can get. Long term contracts that include auto-renewal may not be in your best interest.
To avoid a post-purchase letdown, software buyers can ask more questions about system requirements, how their current processes will change, realistic timelines, and add-on expenses like customization, training and updates for flexibility as needs change.
Software sellers can listen to and address buyers’ concerns with a genuine focus on serving rather than just selling. Sellers can maximize lifetime client value by shifting from a short-term transactional mindset to a long-term partnership mindset. Sharing case studies, testimonials and stats on process improvements can build credibility and trust.
As a former computer seller there’s a joke that applies… what’s the difference between a software salesman and a used car salesman? The car salesman knows when they’re lying… It’s a buyer beware situation but most buyers fail to understand how easy it is for those selling software to lie — often without knowing it. This is enabled by software being infinitely modifiable – in theory. In practice, it’s not. Buyers need to be extra wary when approached by software vendors.
As a seller of software for decades, the responsibility for success is shared. The seller needs to focus on the prospects specific goals. Then share those goals with the supporting team. I’ve sold identical solutions to multiple clients. Each had a different objective and use case. If the support team isn’t aware, the support will fail.
On they buyer side, many buyers go cheap on training and support. Key elements to initial and ongoing success. Buyers also sometimes hide their true intentions. Lack of disclosure doesn’t help the selling team optimally align the solution.
While it’s challenging to be fully collaborative in any negotiation, selecting a proven and trustworthy vendor to get the capabilities fit right, and committing to invest in success results in the best outcome for all parties.